What changed
RBI introduced a new 'Foreign Portfolio Investment' scheme, merging the earlier FII and QFI categories into a single 'Registered Foreign Portfolio Investor' (RFPI) class. Existing FIIs with valid SEBI registration are deemed RFPIs till expiry of their three-year block; QFIs may continue for one year or until they obtain RFPI registration. The circular also clarifies that RFPIs can open Special Non-Resident Rupee (SNRR) accounts and foreign currency accounts with AD banks.
What it means for you
Banks must now treat all portfolio investors under one RFPI framework, simplifying KYC and reporting. The individual and aggregate investment limits (below 10% and below 24% of paid-up capital) remain unchanged, but banks need to ensure compliance with composite sectoral caps under FDI policy. The SNRR account facility continues, and repatriation of proceeds after tax is permitted.
What you must do
- Update internal systems to recognize only RFPI classification; stop separate FII/QFI codes.
- Verify that existing FII/QFI clients with valid SEBI registration are automatically treated as RFPIs.
- Ensure SNRR and foreign currency account opening procedures align with the new RFPI framework.
- Monitor RFPI investments against the 10% individual and 24% aggregate limits, including sectoral caps.
- Facilitate repatriation of proceeds from SNRR to foreign currency accounts only after tax deduction.
Who it affects
All Category-I Authorised Dealer Banks, Foreign Portfolio Investors (formerly FIIs and QFIs), Indian companies issuing shares or convertible debentures to RFPIs, Stock exchanges and clearing corporations handling RFPI trades
What happens to existing FIIs and QFIs under the new scheme?
FIIs with a valid SEBI registration are automatically deemed Registered Foreign Portfolio Investors (RFPIs) until the expiry of their current block of three years. QFIs may continue for one year from the date of commencement of SEBI (FPI) Regulations, 2014, or until they obtain RFPI registration, whichever is earlier.
What are the investment limits for RFPIs in Indian companies?
The individual limit is below 10% and the aggregate limit is below 24% of the total paid-up equity capital or paid-up value of each series of convertible debentures. These limits must also respect any composite sectoral caps under FDI policy.